Why PM Mahathir seeks to engage with China?

After his coalition won the election in May 2018, Malaysia's Prime Minister Mahathir Bin Mohamad declared that he would suspend several Chinese-funded projects.

Mahathir also made several visits to Japan, giving the world the impression that Malaysia's new government will align itself more closely with Japan. However, in an exclusive interview with the media, Mahathir openly refuted this, stating that he is "a good friend of China," and bears no anti-China sentiment. Mahathir further mentioned that if China would agree to downsize the East Coast railway project, the Malaysian government would be enthusiastic to continue the project.

What is hiding up the sleeves of Mahathir? Why does he change his position so drastically? We believe there are several reasons.

First, Mahathir is not fundamentally against the Belt and Road initiative (BRI). Many of the Malaysian BRI projects set up by the previous government and the agreements were signed by the former prime minister Najib Razak. If those were to become successful, the credit would not go to the current government. Of course, if the projects were not successful, then the Mahathir government would be the one holding the bag! It is natural that Mahathir would find this unacceptable, and that he would want to renegotiate terms, to ensure his government was appropriately recognized.

Before Mahathir visited China last year, he was already attempting to negotiate concessions from China. We don't believe his tough talks were a sign that he would not want to work with the Chinese government. Mahathir also has a "Malaysian dream," which is to ensure that Malaysia could prosper in the long term, and outstanding debts are reduced.

Malaysia's export situation is far from optimal, and there is a great need to seek the support of neighboring countries. Without just cause, Mahathir's government could not simply tear up the signed agreements, as it could lead to concerns in foreign companies who may then slow down or stop investing in Malaysia. It is believed that Mahathir realizes he must become part of BRI to realize the "Malaysian dream."

Second, Mahathir has realized that by playing the US and Japan cards he was not getting the expected results. Since Mahathir took office, he has not been able to strike up a meaningful conversation with the US. The US President Trump's internal affairs and diplomatic challenges are simply too overwhelming. He was in no mood nor had the time to deal with issues involving Malaysia.

It soon became clear the US card no longer carried any weight, so Mahathir played the Japan card instead. Before visiting China, he visited Japan on two occasions. Unfortunately, Japan turns out to be a hard nut to crack for Malaysia. The Japanese companies are highly sophisticated and experienced in international investment, so were not easy to engage. Additionally, Japan and Japanese companies are highly selective in their investments and they need concrete benefits, so Mahathir had to engage with China.

Third, Mahathir made some judgment errors, failing to recognize that China today is not the China of yesterday and China now has many countermeasures in its dealings with Malaysia.

Malaysia hopes to grow by developing mobile internet and smart cities, areas where China is a world leader. Countries or regions such as Europe, US and Japan will not be able to provide the same quality to Malaysia, nor at competitive pricing levels. Yet, for China, Malaysia is but one of the many BRI countries. Therefore, for Malaysia, there is only one major country in the world with a stable economic development and foreign investments. If Malaysia loses Chinese investments, or worse, suffers Chinese economic sanctions, it will hit the Malaysian economy very hard. With these considerations, it is no wonder Mahathir was forced to face the economic reality facing his government.

China gained experience for future BRI project negotiations from Malaysian case. In future negotiations with some leaders of the countries along the BRI, this experience will help in promoting investments of Chinese enterprises in Malaysia and other BRI countries. China needs to let local small and medium enterprises as well as the population discern the benefits but it must also provide economic and technological advancements and social progresses for such countries.

Only this way can China be free from the so-called governments' "wishful thinking." This demonstrates clearly the mutual benefits of the BRI and will bring tangible benefits to the people of those countries involved.

Feng Da Hsuan is chief adviser of the China Silk Road iValley Research Institute and former vice president for research at the University of Texas at Dallas. Liang Haiming is chairman and chief economist of the China Silk Road iValley Research Institute. bizopinion@globaltimes.com.cn